Chapter 3
Group Work
For the following identified Accounts: 1) determine the Account Type [A, L, OE, R, or E] ; and 2) determine
the Normal Balance – DR or CR [Which side of an entry INCREASES the balance of the account?]
Account Type
Normal Balance +
Cash
______A______
_______DR______
Accounts Payable
______L______
_______CR______
Inventory
______A______
_______DR______
Retained Earnings
______OE_____
_______CR______
Rent Expense
______E______
_______DR______
Accounts Receivable
______A______
_______DR______
Capital Stock [also called Contributed Capital]
______OE_____
_______CR______
Notes Payable
______L______
_______CR______
Sales Revenue
______R______
_______CR______
Utilities Expense
______E______
_______DR______
Problem 3-3
On a separate sheet of paper, prepare a journal entry in a General Journal to record effects of each of the
following transactions.
March 2:
Received contributions of $20,000 from each of the two principal owners of the new business in
exchange for shares of stock.
March 7:
Signed a two-year promissory note at the bank and received cash of $15,000. Interest, along
with the $15,000, will be repaid at the end of the two years.
March 12:
supplies.
Purchased $700 in miscellaneous supplies on account. The company has 30 days to pay for the
[Turn this sheet over and complete transactions for March 19-31]
March 19:
Billed a client $4,000 for services rendered by Expert in helping to install a new computer
system. The client is to pay 25% of the bill upon its receipt and the remaining balance within 30
days.
March 20:
Paid $1,300 bill from the local newspaper for advertising for the month of March.
March 22:
Received 25% of the amount billed the client on March 19.
March 26:
computer.
Received cash of $2,800 for services provided in assisting a client in selecting software for its
March 29:
Purchased a computer system for $8,000 in cash.
March 30:
Paid $3,300 of salaries and wages for March.
March 31:
Received and paid $1,400 in gas, electric, and water bills.
Solution
Solution to Problem 3-3
Date
March 2
March 7
March 12
March 19
March 20
March 22
Description
Dr
Cash (A)
Contributed Capital (OE)
20,000
Cash (A)
Note Payable (L)
15,000
Supplies (A)
Accounts Payable (L)
Cr
20,000
15,000
700
700
Accounts Receivable (A)
Sales Revenue (Rev)
4,000
Advertising Expense (E)
Cash (A)
1,300
Cash (A)
Accounts Receivable (A)
1,000
4,000
1,300
1,000
March 26
March 29
March 30
March 31
Cash (A)
Sales Revenue (Rev)
2,800
Computer System (A)
Cash (A)
8,000
Wages Expense (E)
Cash (A)
3,300
Utilities Expense (E)
Cash (A)
1,400
2,800
8,000
3,300
1,400